The Polson Higgs-McCulloch and Partners survey of South Island businesses shows that business leaders expect their operating environment to become increasingly complex over the next five years.
Polson Higgs partner Michael Turner told the Otago Daily Times that while it was heartening to see that about half of the respondents expected their profitability to increase during the next five years, compared with the 23% who expected profitability to drop, a substantial majority also expected a challenging future.
The areas of greatest concern included greater competition, greater demand for products and service innovation, increasing regulation, higher operating costs, greater difficulties securing skilled employees and higher cost of finance.
The last two were the probably the most important, he said.
"As New Zealand and most of the world come out of the recession, the demand on skilled labour is going to grow. Not only is there going to be a battle among New Zealand firms to retain and attract staff, but there is the growing gap between New Zealand and Australia."
About 20% of South Island firms were planning to not increase salaries in the next year, while 50% expected to increase salaries by between 1% and 2%, Mr Turner said.
That sentiment was possibly based on an ability to pay and a conservatism, given the difficult times businesses had come through.
However, it conflicted with the views expressed that securing skilled staff would become more difficult and that concern was likely to increase, particularly if salaries continued to fall behind Australia.
The main area of the survey that concerned Mr Turner was the deterioration in the availability of finance for businesses.
Many lenders - finance companies, in particular - had withdrawn from the market and those remaining had taken a more conservative approach.
Looking ahead, businesses believed the availability of finance would not alter from present levels during the next 12 months.
"Given that finance is the lifeblood for growth and expansion, we expect this to be a containment factor for business throughout 2010. People wanting to expand or with good ideas will have difficulty funding them."
Banks would still fund entrepreneurs but were becoming more rigorous in their requirements, Mr Turner said.
A new layer of finance might develop but it would be priced for risk and be more expensive.
In a second part of the survey, the businesses surveyed admitted a poor understanding of the emission trading scheme (ETS) and very few companies were actively developing strategies around it.
Only 6% of those surveyed professed to having a very good knowledge of the scheme, 34% said their understanding was poor, 24% fair and 36% satisfactory. Mr Turner said that as economic conditions deteriorated in late 2008, there was a large drop in the proportion of businesses reporting that environmental issues were significant to their businesses.
"As optimism has returned, environmental issues have assumed greater significant again, even if some of these issues, particularly the ETS, are poorly understood."
• The survey was carried out online, with 79 respondents from 315 businesses approached. Companies with a turnover between $1 million and $5 million made up the majority of respondents.
